Joint Ventures: Best Practices to Give Your Business a Boost

Joint ventures are a great opportunity for businesses to grow and seek new markets and new horizons. It is like a marriage. One business sees good prospects in hitching its fortunes with another business, either bigger or smaller. It requires much introspection. Just like a bride and bridegroom who turn over the pros and cons of taking the plunge into a partnership from the independence of being single.

Both businesses see some good points in each other; some evidence of best practices in the other which will give both the businesses a boost in growth and a corporate mission. These joint ventures are reminiscent of the alliances Kings and Queens used to make in order to become a stronger united front. Today businesses combine to fight the growing global challenge from international conglomerates.

Swallow or Get Swallowed

Despite the hue and cry over sustainable development it is a truth of the corporate world that bigger and richer is better. Making profit is becoming difficult for small businesses with shrinking profits because of international competition. Protected industries all over the world have to face the challenge of manufacturers and services from countries like China, India and South Korea. Even Japan is feeling the heat from these challengers. By joining forces two businesses can take on many powerful competitors.

Opening New Markets

International joint ventures bring in the best practices of both cultures and fuse together to form an extraordinary entity. A great example of successful joint ventures is Sony Corporation. It has collaborated in the last half century with many companies, like Tektronics, Union Carbide, CBS, Prudential Insurance, Wilson sports goods and Texas Instruments. Everyone came out shining through these projects especially Sony, which became a worldwide brand and continued to do so with its growth into video games and consumer electronics.

Sony is a big example for people who frown on joint ventures. There are hundreds of such examples but the salient feature in the success of Sony was its persistence, its patience, its desire to adjust with new partners and its innovation.

Main Advantages of a Joint Venture

An international joint venture opens up two nations to a product. The partners take on a big risk but have the assurance that both parties will try their utmost to succeed and share the burden in the case of a setback. The initial ground rules established in joint ventures which insist upon transparency in dealings make for a strong organization.

A willingness to learn from each other benefits both companies. An open mind will go far in the success of a joint venture.

Shared Decision Making

The biggest shock for both the parties in a joint venture is the loss of individual decision making powers. Now decisions can only be made through a board and meetings. It slows down the progress of the new venture. In this modern individualistic world a clash of egos is natural. Many joint ventures fail because of an unwillingness to understand the other person’s viewpoint.

Sometimes people enter into joint ventures without visualizing or asking professionals to peep into the future and the prospects of the product or service to be sold. A classic example of joint ventures which crashed a decade ago is businesses that jumped into the field of VCRs and audio and video tapes. In ten years those businesses and products have been wiped off the face of the earth.

It is difficult to come to a conclusion as to the future of joint ventures. The world itself is reshaping itself. Financial giants have fallen by the wayside and innovations in communications, gaming and electronics are changing the world year by year. Only the brave and financially strong with set limits should venture into joint ventures.